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Dow Jones Review: Caterpillar

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

Over the next couple of weeks, John and David will be revisiting some calls they made on individual stocks of the Dow. Today, they're talking Caterpillar. This company is down a disappointing 9% so far in 2012 compared with just a 5% or so gain for the Dow average as a whole. John and David suspected that this one might underperform over the long term, but frankly, they're a bit surprised at Caterpillar's relative performance so far this year. David, in particular, was worried about Caterpillar's margins contracting if the global economy started to slow. The margins haven't contracted yet at Caterpillar or competitor John Deere, but investors appear to be expecting that in the near future. And over the long haul, David remains unconvinced that Caterpillar can outperform the market.

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